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Personal Pension Scheme and Personal allowance.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Personal Pension Scheme and Personal allowance.

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by Tax Tutor.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • December 3, 2015 at 5:13 pm #287345
    Sergi
    Member
    • Topics: 11
    • Replies: 18
    • ☆

    Good Evening,

    I understand that for personal pension schemes there isn’t deduction of contributions before PAYE contrarily to the occupational pension schemes.
    My question is, if a self-employed has 125,000 trading income, and contributes 15,000 gross to a personal pension scheme will he still get the following Personal allowance:

    125,000 less Pension contribution 15,000 = 110,000
    Income in excess of 100,000 limit / 2 : 10,000/2= 5,000
    Reduction P.A= 10,000 – 5,000 = 5,000

    I know the basic and higher band would be extended by 15,000 each, but It’s not clear to me how contributions affect net income in the case of personal schemes.

    Many thanks!

    December 7, 2015 at 2:49 pm #288516
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Your calculation of the revised PA is correct assuming that the taxpayers’ only income is the trading income of 125,000

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